Ethereum Spikes 8% In A Day, Hitting A Six-Month High

The world’s leading altcoin, Ethereum (ETH) managed to secure an unexpected 8% increase that broke through the $2,000 barrier. The price increase also happened to be the highest price point for ETH in six months. The cause, according to experts, is the news that BlackRock had registered its iShares Ethereum Trust in Delaware. The rumor set off a chain reaction that caused liquidations of $48 million in ETH short futures.

Source: CoinMarketCap

The rumor raised hopes in the Ethereum community for a possible Ether spot ETF application from $9 trillion asset manager BlackRock. The move is surprisingly similar with BlackRock's June 2023 iShares Bitcoin Trust registration in Delaware, one week before their first spot Bitcoin ETF filing.

Investors may have jumped the gun, too, given BlackRock's absence of a formal comment. The asset manager's overwhelming power in traditional finance puts those who are betting against Ether's success in a risky situation.

Traders are optimistic on Ethereum

ETH derivatives metrics often indicate the positions held by professional traders following such unexpected rallies. The monthly futures for Ethereum typically trade at an annualized premium of 5% to 10% above spot markets, meaning that sellers are becoming more greedy in order to delay settlement.

The Ether futures premium reached its biggest peak in more than a year, rising to 9.5% on November 9. On October 31, the premium surpassed the 5% neutral threshold, which deleted a two-month stretch of bearishness and minimal demand for leveraged long bets.

Despite the spot ETF rumors, there's still doubt that Ethereum bulls managed to overcome the resistance, because ETH increased 24% between October 18 and November 8, prio to the BlackRock ETH announcement. The 30-day volumes of the top decentralized applications (DApps) indicate a larger demand for the Ethereum network, which is reflected in the current price action.

However, a closer look at the retail indicators and the larger cryptocurrency market structure reveals some discrepancies with the recent surge in optimism and demand for leverage through Ether derivatives.

Retail statistics suggest that interest in ETH and other cryptocurrencies is sluggish.

To begin with, over the past week, there has been no movement in the Google searches for "Buy Ethereum," "Buy ETH," and "Buy Bitcoin."

It may be argued that retail traders generally enter the cycle a few days or weeks after significant price milestones and the 6-month high are reached, behind the bull runs. Nevertheless, if stablecoins premium is used as a proxy for Chinese retail trader activity in the cryptocurrency space, the demand for cryptocurrencies has been decreasing.

The USD Tether peer-to-peer trade differential between China and the US currency is measured by the stablecoin premium. Overbought demand tends to push the signal above fair value at 100%. In bear markets, Tether's market offer gets oversupplied, which results in a discount of at least 2%.

The Tether premium on OKX is currently at 100.9%, which suggests that retail investors' demand is evenly distributed. This is in contrast to the 102% from October 13, for example, when the market capitalization of all cryptocurrencies increased by 30.6% till November 9. This further demonstrates that there isn't yet a significant demand from Chinese investors for stablecoin-based fiat-to-crypto conversion.

Essentially, it appears that the expectation of a spot ETF approval and the derivatives markets are what propelled Ether's surge past $2,000 in value. Retail demand declines do not always portend an imminent downturn. The $2,000 support level is put to the test, nevertheless, as the excitement surrounding BlackRock's Ethereum Trust registry and high leverage longs in ETH derivatives cause concerns.